UK professional services firm RPC has stated that regulations for the cryptocurrency market in the UK would take about two years to introduce based on the Financial Conduct Authority’s ( FCA ) remit. RPC Legal Director James Kaufmann stated the process of initiating the required regulations needs consultations which normally take time.
Long Framework Establishment
The FCA has a broad remit, having to regulate over 56,000 firms involved in a wide range of financial activities, including the advisory regulation of 18,000 firms, hence the lengthy period involved.
As a result, said Kaufmann, even if the latest proposals of the Members of Parliament (MP's) were fast tracked, it could still take years for regulations to cover the UK cryptocurrency market that treads the middle ground between protecting retail participants and allowing the UK's cryptocurrency market to thrive.
According to RPC, previous instances have shown that even relatively minor changes to financial regulations may take years to make. The period between the original announcements in May 2004 and commencement in November 2006 of the regulation of home reversion plans is one such example.
The regulation of cryptocurrencies would involve a process where HM Treasury assesses the particular activities related to them that need oversight. This would require a market study with a proposal on the need for regulations drafted for consultations. Publication of amendments and setting of an implementation date will only be possible after the consultations are done.
At a time in which regulators already have Brexit and other burning economic issues on their hands to deal with, complex and continuously evolving issues such as that of cryptocurrencies would prove difficult and take a while.
The RPC believes the FCA’s responsibility would be hugely increased with the introduction of new regulations, and this raises questions about whether the FCA is capable of handling the possible expansion of its role or if it has the needed funding.
Another area of concern would be whether the FCA possesses the needed expertise to regulate a sector as technically complex as the crypto one, and how prepared it is for reactions from cryptocurrency markets.
CryptoGlobe recently reported the European Parliament has proposed a common regulatory framework for cryptocurrencies across the EU. The proposal, similar to parts of the HM Treasury report, was published under the title: ‘a Motion for the Resolution on Distributed ledger technologies and blockchains: building trust with disintermediation'.
James Kaufmann noted he believes the race to establish a workable and regulated regime for cryptocurrencies is surely worth winning as their usage becomes more widespread across the globe. Authorities will also benefit from the creation of a cryptocurrency trading hub as different stakeholders - financial institutions and regulators - will benefit in tax revenues.